After hitting the 2 years high at 386, stock price of CAIRN
INDIA is moving in downtrend from last 6 months. The current downtrend seems
exhausted as stock has reached to the strong demand zone of 255 – 265 levels
and Momentum Oscillator RSI is also approaching oversold territory on the weekly
chart. A series of ‘positive divergence’ of RSI can be clearly seen in daily
chart. If we meticulously observe the prices, we are witnessing emergence of a
harmonic pattern named as ‘Bullish AB=CD Pattern’. Here, after the fall from
386 (A point) to 304.10 (B point), price has made the high of 344.40 (C point),
which is 50% retracement level of the fall (AB). After that stock is falling
and reached to 266 levels (D point), which is near 200% retracement of BC, thus
fulfilling all the criteria of ‘Bullish AB=CD pattern’. Apart from that, 100%
projection of ‘AB’ from ‘Point C’ is also placed at 263 levels, which shows the
symmetry of the pattern is perfect. Since ‘CD’ wave is slower than ‘AB’ wave,
chances of trend reversal is high. Thus, one can buy this stock at
current levels (262) and on dips to Rs 258 for a target price of Rs 302 - 318.
Stoploss for the trade should be placed below 253 levels on closing basis.
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